California starts issuing IOUs, three banks accepting so far

State finance officials set a 3.75 percent interest rate and an Oct. 2 redemption date this morning for the IOUs that begin going out this afternoon, while legislators and the governor continue to wrestle with the state's budget problems.

State finance officials set a 3.75 percent interest rate and an Oct. 2 redemption date this morning for the IOUs that begin going out this afternoon, while legislators and the governor continue to wrestle with the state's budget problems.

Wells Fargo, meanwhile, became the second large bank to announce it will accept the IOUs as cash until July 10. Bank of America had announced the same thing on Wednesday. Golden One Credit Union has also said it will take the IOUs, but announced no termination date for doing so.

Just how long the rate and date for the IOUs are in effect, however, may be as uncertain as the outcome of the partisan budget struggle under the Capitol dome. The Schwarzenegger administration said it favored a 1.5 percent interest rate on the IOUs, and a longer date before they had to be redeemed.